July 24 Market Update

Doesn’t seem like we are going to get any more inventory out this year.   It usually peaks in June, drops gradually until September, and drops more sharply after that to the low in December.

2016 was an abnormal year because inventory was drawn down throughout the whole year, whereas this year we are more on track for a normal seasonal pattern.  However the pattern is squashed, since we gained only 400 listings from January to June instead of the average of 800.

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July 17 Market Update – Gordon Head drops off a cliff

Weekly numbers courtesy of the VREB.

July 2017
July
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 187  384
972
New Listings 315  582
1127
Active Listings 1972  1961
2161
Sales to New Listings  59%  66%
86%
Sales Projection  778
Months of Inventory 2.2

On the surface of it, seems like much the same as last year.  Tight market conditions, maybe a very slight easing but nothing major (graph below the fold).

But I happened to take a look at sales in Gordon Head since I haven’t noticed much selling lately.  Once one of the hottest neighbourhoods for detached houses, there were a grand total of 3 sales in the first half of July.   And don’t think it’s because there’s no inventory.    There are 36 28 properties on the market, and if this sales rate continues we’ll have 6 sales in July, or 6 months of inventory (There were 36 active listings as defined by VREB to mean any property that was for sale in the month).

Maybe just a fluke?  The rest of the sales coming in the second half of July?   As Marko pointed out, a number of other properties have accepted offers in place with conditions scheduled to be removed in the next few days so if those offers hold this could very well increase.  I haven’t seen other neighbourhoods where sales have just fallen off a cliff like that.  Oak Bay sales are at 19 so July will handily outsell last July (24  sales).   The Uplands has just one sale so far, but there are so few sales there normally that it isn’t wildly unusual.   Downtown Victoria looks like we’ll about match 2015 sales levels.   Maybe that million dollar listing for a 70s box with a coat of paint in Gordon Head woke people up to the nuttyness of price levels.

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July 10 Market Update

Weekly numbers courtesy of the VREB.

July 2017
July
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 187
972
New Listings 315
1127
Active Listings 1972
2161
Sales to New Listings  59%
86%
Sales Projection
Months of Inventory

2.2

An OK start to the month.   22% fewer sales than this time last year, but only 12% fewer properties on the market.   The end result is an approximately equal reading for months of inventory and a lower sales/list ratio.

Second quarter buyer origin data is out as well.  Remember, the VREB “buyer origin” data represents what the buyers of a property put down on the contract as their address.  It does not indicate buyer nationality, and anyone moving here first to rent would be counted as a local.   This is different than the foreign buyer data that the province collects at the time of the title transfer.  The VREB no longer allows the buyer origin field to be queried so I can no longer make charts like this but they do release the report on the region quarterly instead of annually.  Here is the latest data.

It’s clear that lower mainland and out of town buying in general has eased up from 2016, if only a bit.   Since sales are down overall, it means the absolute number of out of town buyers should end up around 30% less than in 2016. The full data for the first half of the year looks like this.

And comparison to previous years:

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Hottest Markets Slowing Down

It’s a bit of an odd market out there.  On the one hand, there are more over ask sales than even last year and we have extremely low inventory.   On the other the number of price cuts seem to be increasing.   By the stats it’s still a very hot market but around here there are more listings coming on and they are selling quite slowly.

Last June Gordon Head was smoking hot, with only 30 detached homes for sale, and half of all sales happening in 6 days or less.   Now there are 48 listings and climbing, and it takes twice as long for a sale.   Similar situation in Oak Bay, with listings double that of last June, and time to sell climbing.   So far the overall market stats have been masking these regional pullbacks.  Places like Langford have fewer detached listings than this time last year and properties are selling twice as quickly (median 10 days to sell instead of 22 last June).

Now the average days on market are still low compared to any normal year, but as it increases we will start to see fewer above ask sales.   Quite logically, the longer a property sits, the more of a discount off ask it is likely to sell for.  More importantly for buyers, a somewhat cooling market gives some breathing room to do due diligence and add conditions to an offer.

The above chart was created from history in 2016/17 for the sellers’ market, 2014/15 for the balanced market, and 2013 for the buyers’ market.

Also weekly numbers courtesy of the VREB.

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June 19 Market Update

Also weekly numbers courtesy of the VREB.

June 2017
June
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 96 331  586
1174
New Listings 189 542  849
1319
Active Listings 1939 2000  1992
2289
Sales to New Listings  51% 61%  69%
89%
Sales Projection 915  997
Months of Inventory

1.9

Well the 2000 listing level was short lived.  A good sales week drove it back down a smidge and we are now 15% below last year’s sales rate with 15% fewer properties on the market.

Despite some early signs of softening like more price changes, it seems the number of over-ask sales aren’t slowing down.   Looking at a few days of sales in the past years, the percentage of over-asks (defined as more than 1% over asking price) is higher than ever.  You can see a big difference between a hot market like now and last year, to a balanced market (2015) and a slow market (2013).

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Fiduciary..

This was a topic in the comments a little while ago so here’s a quick look at the different types of relationship you can have with a REALTOR® (this only applies to members of the CREA hence the registered term).  Anyone who’s ever bought or sold something with an agent in the last few years likely had this explained to them to various levels of completeness, but I recall when we bought our house the differences between going with a buyer’s agent and dealing directly with the seller’s agent weren’t clear to me (too many forms to read).

Essentially whenever you work with a realtor you can either be their client or their customer and each of those governs what responsibilities the realtor has towards you.

As the client, the realtor is called your designated agent and has a fiduciary duty towards you.  That means that he/she must act in your best interest at all times, protect your confidential information, obey your lawful instructions, act with reasonable competence, and disclose everything (including any compensation they may receive) that could be material to the deal.

If you are a customer, the realtor does not have a fiduciary duty towards you.   In this case they can give general market information, help with standard forms and processes, and present offers and counter offers.  They specifically can’t advise on price or negotiate on your behalf, or disclose any confidential information about the sellers.   Basically they’re working for the other side so buyer beware.

Once the relationship is set (generally by you initialing the Working with a Realtor form), it can’t be downgraded.  So you can later go from being a customer to a client, but if you are working with a realtor as a client, the relationship endures forever.  So that Realtor you sold your house with 10 years ago?  He still has a fiduciary relationship towards you and will forever even if you have no more business dealings.

In the vast majority of cases if you are buying with a buyer’s agent or selling with a agent you will be their client.   If you are selling with a mere posting, read your listing contract as most agents will lay out some limitations to their duties.

If you are not working with a buyer’s agent (like we did when we bought our house) and go directly through the listing realtor, then you will be their customer (this is called double ending).   This is fine, as long as you understand who they’re working for, the limitations of advice that they can give you and do your own due diligence.

Of course any ethical code is only as good as its adherents, and the fundamental misaligned incentives in the real estate business means that there are always bad apples that don’t adhere to the fiduciary duties laid out here and exploit the information asymmetry to their advantage.   After all, self regulation was not taken away from the industry because everything was peachy.  Under the new regime, maximum fines for breaches of fiduciary duty have been increased tenfold so hopefully we’ll see less of it going forward.

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May 29 Market Update

Weekly stats update courtesy of the VREB.

May 2017
May
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 193 436 698  883
1289
New Listings 361 692 1013 1296
1423
Active Listings 1797 1854 1855 1910
2406
Sales to New Listings  53% 63% 69% 68%
91%
Sales Projection 889 940 966 979
Months of Inventory

1.9

Almost rounding out the month here so let’s take a look at what the prices have been doing so far this year.   Lots of discussion about how the detached market in the core might be cooling.  Sure enough if we take a look at the change in months of inventory, we can see that the core SFH market has cooled the most from last May, going from an insane MOI of just over 1, to just over 2 in one year.  Still extremely active, but cooling.

The condo market has not eased up from last year by any significant amount though.  It was slow to catch up to the detached market and now it is lagging again.

Condo prices still trending upwards quite strongly, which is taking the overall market up with it.   SFH prices also up, but the detached prices in the core are more or less where they were at the beginning of the year.  Before reading too much into that though, remember how these charts with few data points can mislead you.  We’ll want to watch the repeat sale indices and the leading indicators of DOM more closely going forward.

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May 22 Market Update

Weekly stats update courtesy of the VREB.

May 2017
May
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 193 436 698
1289
New Listings 361 692 1013
1423
Active Listings 1797 1854 1855
2406
Sales to New Listings  53% 63% 69%
91%
Sales Projection 889 940 966
Months of Inventory

1.9

About a week left in the month and at this pace of new listings we will fall short of last May’s total new listings which doesn’t help the supply crunch.    After some decent inventory gains in the last weeks (+72, +73, +57), we were back to flat in the last week at 1855 properties on the market.   Last year this time there were 2431.

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May 15 Market Update

Weekly stats update courtesy of the VREB.

May 2017
May
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 193 436
1289
New Listings 361 692
1423
Active Listings 1797 1854
2406
Sales to New Listings  53% 63%
91%
Sales Projection 889 812
Months of Inventory

1.9

A quarter less sales than this time last year, and a quarter less inventory.   Pretty interesting to see the months of inventory tracking last year’s performance so closely.   We are scraping the bottom of the barrel here, and despite increasing reports of more new listings hitting the market, the market measures are not showing any cooling down in aggregate.

It is true that individual market segments are cooling.  For example, there were 1.85 months of inventory for detached homes in the core in April compared to 1.06 a year ago.   This will be something to watch going forward but so far these are being counteracted by other market segments that are more active this year than last (such as condos and townhouses).   At this point the market cannot get more active, but we’ll need a bit more data to determine if it is going to back off across the board or just bounce around the bottom for a while.. Continue reading

May 8 Market Update

Weekly stats update courtesy of the VREB.

May 2017
May
 2016
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 193
1289
New Listings 361
1423
Active Listings 1797
2406
Sales to New Listings  53%
91%
Sales Projection 889
Months of Inventory

1.9

Exactly the same rate of new listings as this week last year, but 31% fewer sales.   Primarily still because last year a potential buyer had 750 additional properties to choose from, so the ratio of viable candidates to the dregs was higher.      However this is the first month I’ve seen where sales are down more than listings.   What to watch for is if months of inventory start increasing compared to last year, then we will know the market is backing off the record pace of last year.   So far they are just about identical. Continue reading